Monday, July 15, 2013

Barry's Sunday Column: We're About To Shoot Ourselves In The Foot By Not Investing In Our Infrastructure

Back in an October 2011 column, we discussed the many ways repairing
our fraying infrastructure could help the United States’ economy. Our
transportation grid has gotten old and out of shape. The interstate
highway system is in disrepair. Bridges are rusting away, with some
collapsing now and then. The electrical grid is a patchwork of
jury-rigged fixes, vulnerable to blackouts and foreign cyberattacks. The
cellular network of the United States is a laughingstock versus Asia’s
or Europe’s coverage. Two years later, none of that has really changed.

The
argument then was that a major infrastructure repair program would
create jobs, keep us competitive with China and improve the security of
our ports, energy facilities and electrical grid. And as a fantastic
bonus, borrowing costs for funding these repairs were at the lowest
levels in a century. Imagine the least costly way to improve and repair
our infrastructure imaginable, and that was what was available to us:
the deal of the century.

All of the above remains true — except
the bit about ultra-low rates. They have begun to move higher as markets
anticipate the end of the Fed’s quantitative easing. The most widely
held U.S. Treasury, the 10-year bond, was yielding about 2.6 percent
late last week — a full percentage point higher than in early May. The
30-year bond, which we tend to think of as the cost of funding
infrastructure that will last for decades, has risen almost as fast.